Max MasonMedia & Marketing Editor

Feb 7, 2020 – 4.54pm

REA Group chief executive Owen Wilson is confident of a rebound in Australia’s property market, led by the Sydney and Melbourne markets and banks again making it easier to access credit.

REA shares lifted 2.7 per cent on Friday afternoon as the News Corp-majority owned property classifieds and services business experienced a soft half-year due to weakness in the Australian market.

REA CEO Owen Wilson is expecting the second half to be stronger. Eamon Gallagher

Net profit fell 13 per cent to $152 million, while revenue slipped 6 per cent to $440.3 million.

Mr Wilson told AFR Weekend that the result showed the resilience of REA’s business as the local property went through one of its toughest periods of the past 30 years as the business focused on costs and selling premium products.

“The market understands what’s been happening in the property sector here. The impact of the listing environment in the first half wasn’t a surprise,” Mr Wilson said.

Over the first half of the 2019-20 financial year, Mr Wilson said REA had been getting more buyer queries, indicating a readiness for the property market to improve.

This was fuelled by the Reserve Bank of Australia’s cut to official interest rates, taking them to the lowest ever level, 0.75 per cent, and the loosening of residential lending restrictions by the Australian Prudential Regulation Authority in July.

Mr Wilson said that following the Australia Day long weekend, listings were moving into a healthy range.

The REA boss also noted that anecdotal concerns with agents showed forward-order bookings for Autumn are quite strong.

“Melbourne and Sydney definitely led us into the downturn in terms of listing … Melbourne and Sydney appear to be leading us out of the downturn,” Mr Wilson said.

According to CoreLogic’s latest home value index, property values in Sydney rose 1.1 per cent in January, while Melbourne lifted 1.2 per cent.

“The other thing we’re seeing is that banks are back lending. It still is taking longer to get finance, but it is getting there.”

Mr Wilson said the second half should see improved numbers, particularly with the comparison to the final three months of the past financial year.

The Labor party, which was expected to win the federal election in May but lost, had flagged a policy to scrap negative gearing – spooking many property investors – as well as a policy to end franking credits.

“The recovery in houses prices particularly in Melbourne and Sydney, I think, will bring sellers back to the market. There has been a strong recovery, particularly in the last quarter.”

Mr Wilson said he also expected a pick-up in the developer segment towards the middle of 2020. A downturn in construction over the past two years has been predicted by the Commonwealth Bank to lead to a shortage of apartments by the middle of this year.